Prices going back to 2003 levels and pricing going to a level where buyers can afford a traditional mortgage at 40% of income are not necessarily mutually exclusive.
Correct, it’s all relative to the specific area you’re referring to. However, in most of San Diego, it’s quite different. In some area, we are already at 2003 price or early 2004 price. No one know how deep and fast this will fall. We just have to wait and see.

What we’re going to get is probably what we don’t expect. Maybe 20 years of stagflation based on offshoring of jobs to China and India and $150 dollar a barrel oil in today’s dollars.

Peak Oil is here. Another oil shock along with huge debt burdens will drive the economy down just like in the mid-70’s.

Wow, time warp baby! Bikerider, the world is a very different place today than the one you remember. It is very common for two married 25 year olds a couple years out of college to have $50K+ jobs each with combined six figure HH incomes. These are the types of 1st time buyers we see in the market. The young couples with $40K combined incomes you are referencing is what we call renters in these parts of the country. Unfortunately, some were suckered into buying with no doc loans but they should have been renters not buyers.

I didnt bother to check your math but simply taking your $150K price and multiplying it by 2.5 (i.e. 100/40=2.5) we get to $375K. IMHO, when all is said and done there will be a healthy 1st time buyer market between $300K and $400K for nice places not dumps in SD.

sdrealtor, maybe time warp, maybe not. I was talking about the US as a whole, not just the California area which is a bit out of touch with reality. I guess I mixed too much data to then speak of what a median home price would be for your state. Not everyone has the opportunity to attend college. And those that do now typically exit with a nice big fat student loan to pay back. That debt load should figure in to how much house they can afford starting out. Home prices are too high. Realtors don’t want to hear that, because their commission comes from the sale price.

Your area isn’t the norm for the US salaries. Take a look here….

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

The sad thing is, that now both spouses must work to maintain a certain lifestyle. So, the kids get dropped off and raised by others. In my area, my salary is actually pretty good.

Not sure how valid this site it, but I think it is ok data… http://www.payscale.com/research/US/State=Virginia/Salary

http://www.payscale.com/research/US/State=California/Salary

BR,
Here is your quote.

“How many houses are in the San Diego area in the $150K range?”

I dont think I was mistaken in assuming that you were referencing a $40K HH income for SD 1st time buyers. Another trend that you failed to address is that people are having kids alot older now. Bright educated woman are graduating with great degrees and ambition. Many choose to put off having kids until 30ish to start a career. By that time their spouse has a much higher income and they often take a few years off only to return to work P/T or F/T once the kids are in school. My neighborhood is full of families living this exact life.

I don’t think there is anything wrong with not being able to or choosing not to go to college. While it certainly has been proven to give you a major leg up, I know plenty of successful people w/o college degrees. As for prices being too high, I agree and have absolutely no problem hearing it. I would love for prices to be more affordable. If they reach what I consider reasonable levels, I’ll buy another 2 or 3 properties.

sdrealtor, you’re right, I am probably yearning for the past. You make it sound like a good thing that both spouses work. What was the name of that book….”The Two income trap”. The double income is part of the reason (maybe the whole reason) we’re in the mess now. Home prices and prices for many other goods are out of whack. And the seller just extends the length of time we have to pay for things. I think maybe we have lost sight of some values, just to have more stuff than our neighbor. Or have the same stuff as our neighbor. I grew up in a very small town and my mom didn’t work. She stayed home and raised four children. Get this, mom and dad paid $5,000 for their home back in 1951. Granted, it was a small home, but they raised four children in it. My wife’s parents paid $25,000 for a split level home in Falls Church Va. Not sure of the date, but at least forty years ago I guess. I think the home now is assessed at $560,000. So I wonder, are prices in line now as compared to back then…. comparing salaries then with now and home prices then with now? To me, back then, you bought a house very cheap compared to how great your salary will increase over time. But today, you pay so much for a home, but your salary isn’t going to increase as much percentage wise as in the past. Am I making any sense this early in the morning?

This book is from 2004, but interesting.
http://www.motherjones.com/news/qa/2004/11/10_400.html

“AT: [Laughs] Right. Of course, the notion that mothers are all going to run pell-mell back to the hearth and turn back the clock to 1950 is absurd. But that aside, a big part of the two-income trap is that families have basically bid up the cost of living. Housing is a big example. A generation ago, an average family could buy an average home on one income. Today you can’t do that in three-quarters of American cities. We all know that housing prices are going up, but what most people don’t realize is that this has become a family problem. Housing prices are rising twice as fast for families with kids. “